Your Right to Know

The Ohio Senate voted yesterday to extend the moratorium by another year on the opening of new
Internet cafes in Ohio while expanding the information that cafe owners must supply when
registering with the state attorney general.

The move sets up the larger debate later this month when the Senate is expected to take up a
bill designed to eliminate the largely unregulated gambling businesses from Ohio.

Internet cafes, also called sweepstakes parlors, sell phone cards or Internet time in exchange
for the chance for customers to win cash prizes by playing on devices resembling slot machines.

The debate over Internet cafes in Ohio has extended over two years, and the House has twice
passed legislation that would limit prize payouts to $10, effectively shutting down the more than
600 businesses operating largely in strip plazas across Ohio.

Some states have gone after the businesses, which Attorney General Mike DeWine and other
law-enforcement officials in Ohio argue are connected to crime syndicates and illegal activity such
as money laundering.

Judy Patterson, executive director of the American Gaming Association, which represents casino
operators across the nation, said cafes were under the radar until last summer, and the group was
surprised how widespread they had become.

“It can be a challenging path to (ban them) because they are below the radar and morph easily to
try to evade laws that are very difficult to draft when it comes to technology,” she said.

Some Ohio lawmakers have worried about drafting a bill that either allows cafe owners to exploit
a new loophole or that goes too far in hurting legitimate sweepstakes games.

Gambling entrepreneurs found ways around an instant-bingo ban in 2003, and a skill-games ban in
2007 led to the current sweepstakes games, of which there are now dozens of variations.

The moratorium bill passed yesterday by the Ohio Senate modifies the definition of “sweepstakes
terminal” to ensure that it applies to the various devices.

In North Carolina, when electronic gambling businesses morphed into sweepstakes parlors,
lawmakers there passed laws in 2008 and 2010 to ban them. But recently, the parlor owners have
argued they have new software that puts them in compliance with state law.

“Once they get established, they are very difficult to get rid of,” Patterson said.

Pennsylvania has the most air-tight Internet-cafe law, she said. It bars “simulated gambling
programs.”

Senate President Keith Faber said he expects to pass an Internet-cafe ban this month. The
moratorium on expansion passed yesterday requires all cafe operators to file new affidavits that
must include the names of owners and employees, the date the cafe opened and any other information
the attorney general requires.

Of the cafe owners that registered under a moratorium passed last year, a
Dispatch investigation found that more than half provided no information other than a
street address.

Failure to file within 30 days of when the bill takes effect would carry a daily $1,000 fine and
potentially other penalties. The bill, which now goes to the House, would take effect the moment it
is signed by the governor.